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Royal Gold (RGLD) Moves 3.4% Higher: Will This Strength Last?

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Royal Gold (RGLD - Free Report) shares rallied 3.4% in the last trading session to close at $101.31. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 8.6% loss over the past four weeks.

Royal Gold is transitioning its fiscal year-end from Jun 30 to Dec 31, effective as of Dec 31, 2021. This will align its reporting and disclosure with most of its streaming and royalty peers and other companies in the precious metals sector. In order to ease the transition, the company provided a few unaudited financial metrics on a calendar year basis from 2016 to 2020.

Per the details provided, the company’s total stream revenues have gone up to $397.4 million in 2020. Compared with stream revenues of $292.4 million in 2016, it reflects a CAGR (Compound Annual Growth Rate) of 8%. In 2020, royalty revenues and total revenues have improved at a CAGR of 8% over the 2016-2020 period to $164 million and $561.6 million, respectively. Meanwhile, adjusted EBITDA has gone up 10% over the said time frame to $445 million in 2020 and operating cash flow has risen 13% to $385 million. The company’s annual dividend payout per share has gone up from 92 cents in 2016 to $1.12 in 2020.

These figures coupled with gold price crossing the $1,800 an ounce threshold on concerns over the rapidly-spreading Omicron variant and persistent inflation have led to Royal Gold’s share price appreciation.

This manager of precious metal royalties is expected to post quarterly earnings of $0.99 per share in its upcoming report, which represents a year-over-year change of +7.6%. Revenues are expected to be $162.81 million, up 2.8% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Royal Gold, the consensus EPS estimate for the quarter has been revised marginally higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on RGLD going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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